Venture philanthropy provides a blend of performance-based development finance and professional services to social purpose organisations – helping them expand their social impact. This is a high-engagement, partnership approach analogous to the practices of venture capital in building the commercial value of companies.
In its modern form, venture philanthropy developed significantly in the US in the mid 1990s, took hold in the UK from 2002 and is now expanding into continental Europe.
Although not without its sceptics, venture philanthropy has the potential to contribute to developing a more responsive and diverse capital market for the citizen sector. Its focus on building organisational capacity in entrepreneurial citizen sector organisations, matching appropriate finance with strategic business-like advice makes it a distinctive provider of capital.
Venture philanthropy in Europe has strong links to the private equity and venture capital community, giving it opportunity to influence the corporate social responsibility of a major player in Europe’s financial services industry. Several new venture philanthropy funds have been established by philanthropists with successful careers in private equity.
Europe’s ‘transitional countries’ – in Central and Eastern Europe, the Baltic States and Former Soviet Union – have under-capacitated citizen sectors and widespread, un-addressed social needs. Venture philanthropy may have a particularly valuable role in helping build stronger civil society institutions in these countries.
As a relatively young industry, venture philanthropy faces many challenges – communicating and marketing what it does; developing a menu of financial instruments and advisory services; measuring performance and social impact; collaborating with complementary capital providers such as Foundations.
(Extracted from Venture Philanthropy: the evolution of high engagement philanthropy in Europe, Rob John, Skoll Working Paper, 2006, Said Business School, Oxford)
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1 Princeton University, American Philosophical Annual Meeting Symposium: Effective Philanthropy, Philadelphia, 23 April 2004